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Friday, January 30, 2015

The Baker Hughes U.S. rig count continued its plummet this week, dropping 90 rigs to 1,543. This is the lowest rig count since June 18, 2010 when the stats were actually flip-flopped and there were 574 oil rigs and 953 gas rigs because shale oil drilling was just taking off.

This week, oil rigs were down 94 to 1,223, gas rigs were up three to 319 and miscellaneous rigs were up one to one. By type, horizontal rigs were down 61 to 1,168, vertical rigs were down 23 to 235 and directional rigs were down six to 140. Among gas rigs, horizontal rigs were up five to 240, directional rigs were up one to 49 and vertical rigs were down three to 30.

Thursday, January 29, 2015

Because of swooning natural gas (and oil) prices, the energy market is looking pretty sour right now, but that's not going to be the case forever, especially for natural gas. SNL Financial recently featured the new Stonewall natural gas-fired power plant, a merchant plant being developed by Panda Power Funds, LP in Loudoun County, VA, an exurb of D.C. and one of the fastest growing counties in the U.S. The plant will effectively replace the coal-fired Potomac River Generating Station that closed in 2012 and take advantage of natural gas from the Marcellus Shale to serve a growing population.

Stonewall is one of many instances across the country where new natural gas plants are replacing aging coal facilities. In a few years, gas likely will displace coal as the predominant source of electric power in the country. These changes will be gradual but steady and will be intertwined with the opening of a handful of LNG export facilities and new manufacturing complexes that will further strengthen the demand side of the natural gas equation. The new demand drivers will not eliminate price volatility, but they likely will increase and diversify gas demand, which will help raise the "floor" price of natural gas.

The EIA announced this morning that working gas in storage was down 94 Bcf to 2.543 Tcf last week, which was a warm one. The weekly withdrawal was 57% below last year (-219 Bcf) and 44% below the five year average (-168 Bcf). The current storage level is now 14.6% above last year (2.219 Tcf, a difference of 324 Bcf) and 3.0% below the five year average (2.622 Tcf, a difference of 79 Bcf).

"Sasol has decided to delay the final investment decision on its large-scale, gas-to-liquids (GTL) plant in Louisiana. The timing of the decision will take into consideration progress made with the execution of the Company’s world-scale ethane cracker and derivatives complex, prevailing market conditions and other strategic investment opportunities."

The plant was announced officially in December 2012 but was always a bit of a long shot because GTL plants are very expensive to build. The company will proceed with other expansions at the Lake Charles/Westlake facility that capitalize on abundant, inexpensive natural gas and also take advantage of generous economic development incentives from the state of Louisiana. Don't look for the GTL plant to proceed for quite a while, at least in my opinion, but do look for Sasol to keep receiving public handouts for making a market-driven decision.

Monday, January 26, 2015

The Haynesville Shale rig count was up one last week to 24. Louisiana was net unchanged at 15, but Comstock added a rig and EXCO moved a rig to Texas, whileTexas was up one to nine with that moved EXCO rig.

Friday, January 23, 2015

The Baker Hughes U.S. rig count continued its precipitous drop this week, losing 43 rigs to end at 1,633. Oil rigs were down 49 (258 over past seven weeks) to 1,317 and gas rigs were up six to 316. By type, horizontal rigs were down 24 to 1,229, directional rigs were down seven to 146 and vertical rigs were down 12 to 258. Among gas rigs, horizontal rigs were up three to 235, directional rigs were unchanged at 48 and vertical rigs were up three to 33.

The news that Comstock Resources was renewing its efforts to drill the Haynesville Shale led to some subdued excitement, including a front page article in the Shreveport Times a couple of weeks ago suggesting that the Haynesville might be making a comeback. Comstock's strategic move was made in response to the cratering of oil, and to a lesser degree natural gas, prices. But that same energy price climate has led BHP Billiton, which owns Petrohawk, to slash its U.S. shale budgets for 2015 (specific budgets will be released in February) and concentrate its efforts on the Eagle Ford Shale. The company's U.S. rig count will drop from 26 to 16 by year end 2015, and its Haynesville Shale rig count will drop to one.

Currently, BHP is running four rigs in the Haynesville, having reached a peak count of 17 in mid-2010.

The Wall Street Journal greeted me this morning with the headline "Fracking Assets Sold to Kinder Morgan." "Hmm," I thought, "Kinder Morgan is changing its business model?" Uh, no, the Journal is sloppy in developing its headlines. Can we please cut down on the misuse of the word "fracking?" I expect better - this is the Wall Street Journal, not Mother Jones.

Actually, Kinder Morgan is buying midstream assets in the Bakken Shale. The better headline would have acknowledged KMI entering the Bakken for the first time. Or maybe something noting a potential conflict of interest between Continental Resources and CEO Harold Hamm in the ownership of said midstream assets (hmm, smells like Chesapeake and Aubrey McClendon).

I've grown weary of mainstream media outlets referring to drilling and exploration as "fracking." Fracking is just one aspect of the drilling and production process. Granted, it has become one of the more recognizable and controversial aspects, but it is still only part of the overall process. This article isn't even about drilling - it's about pipelines! It seems that editors are more interested in provoking readers than accurately representing the story.

In the online version at wsj.com, the headline is a more sober "Kinder Morgan Buys Bakken Shale Assets in $3 Billion Deal" - much better. Maybe they had more time to think about it.

The EIA announced this morning that working gas in storage was down 216 Bcf to 2.637 Tcf. The weekly withdrawal was 62% larger than last year (-133 Bcf) and 23% above the five year average (-176 Bcf). The current storage level is now 8.2% above last year (2.438 Tcf, a difference of 199 Bcf) but 5.5% below the five year average (2.79 Tcf, a difference of 153 Bcf).

The Baker Hughes U.S. rig count was down 74 rigs last week to 1,676. Oil rigs were down 55 to 1,366 and gas rigs were down 19 to 310. (Oil rigs are down by 209 over the past six months.)
By type, horizontal rigs were down 48 to 1,253, vertical rigs were down 18% to 270 and directional rigs were down eight to 153. Among gas rigs, horizontal rigs were down 14 to 232, directional rigs were down three to 48 and vertical rigs were down two to 30.

Thursday, January 15, 2015

The EIA reported this morning that working gas in storage was down 236 Bcf to 2.853 Tcf last week. The weekly withdrawal was 12% lower than last year (-268 Bcf) but 24% greater than the five year average (-190 Bcf). The current storage level is now 11.0% above last year (2.571 Tcf, a difference of 282 Bcf) but 3.8% below the five year average (2.966 Bcf, a difference of 113 Bcf).

Friday, January 9, 2015

Baker Hughes reported that working rigs in the U.S. are down 61 (!!!!) this week to 1,750. Oil rigs were down 61 to 1,421, gas rigs were up one to 329 and miscellaneous rigs were down one to zero. By type, horizontal rigs were down 35 to 1,301, vertical rigs were down 12 to 288 and directional rigs were down 14 to 161. Among gas rigs, horizontal rigs were unchanged at 246, directional rigs were down three to 51 and vertical rigs were up four to 32.

Thursday, January 8, 2015

The EIA reported this morning that working gas in storage was down 131 Bcf to 3.089 Tcf last week. The weekly withdrawal was 18% smaller than last year (-159 Bcf) and 10% below the five year average (-145 Bcf). The current storage level is now 8.8% above last year (2.839 Tcf, a difference of 250 Bcf) but 2.1% below the five year average (3.156 Tcf, a difference of 67 Bcf).

Wednesday, January 7, 2015

SM Energy announced yesterday that it is planning to sell its east Texas and north Louisiana operations along with its Arkoma Basin (Oklahoma) properties. As part of the process, it will also close its Mid-Continent regional office in Tulsa to focus its efforts on its core holdings in the Eagle Ford and Bakken/Three Forks areas.

SM pulled back in the Haynesville in early 2012, dropping its last rig in March of that year. It's last completion was recorded in June 2012. As far back as May 2010, the company signed a carry agreement with another operator for its Haynesville properties to be able to shift its focus westward, so this news comes as no big surprise.

On a side note, as careful readers of this site may have noticed, I don't really care for uninteresting company names, especially those with initials (EP Energy, XTO, NFR, etc.), so I was very disappointed in 2010 when St. Mary Land & Exploration changed its name to SM Energy. I guess it was only a matter of time before the company, which abandoned its nominal roots in St. Mary Parish, LA, would leave the state altogether.

Monday, January 5, 2015

Everyone is catching up from the holidays: Baker Hughes released its weekly rig count from last week today. The count showed U.S. rigs down 29 to 1,811. Unsurprisingly, the total U.S. rig count has dropped by 109 over the past four weeks. For the week, oil rigs were down 17 to 1,482, gas rigs were down 12 to 328 and miscellaneous rigs were unchanged at one. By type, horizontal rigs were down 14 to 1,336, vertical rigs were down nine to 300 and directional rigs were down six to 175. Among gas rigs, horizontal rigs were down seven to 246, directional rigs were down two to 54 and vertical rigs were down three to 28.

Friday, January 2, 2015

The EIA reported Wednesday that working gas in storage was down 26 Bcf to 3.22 Tcf, another disappointing storage report. The weekly withdrawal was 73% smaller than last year (-98 Bcf) and 77% below the five year average (-114 Bcf). The current storage level is now 7.4% below last year (2.998 Tcf, a difference of 222 Bcf) but 2.5% below the five year average (3.301 Tcf, a difference of 114 Bcf).

The Baker Hughes U.S. rig count was down 35 as of 12/26. Oil rigs were down 37 to 1,499, gas rigs were up two to 340 and miscellaneous rigs held at one. By type, horizontal rigs were down six to 1,350, vertical rigs were down 15 to 309 and directional rigs were down 14 to 181. Among gas rigs, horizontal rigs were down two to 253, directional rigs were unchanged at 56 and vertical rigs were up four to 31.

It's Been a Gas...

As of 12/31/15, I have stopped updating the Haynesville Play site on a regular basis. I will occasionally post items I find interesting, but I will no longer maintain the data or keep the news current. The site will remain up as an historical archive and a home for occasional musings.

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About Me

My goal is to compile a real-time historical record of the development of the Haynesville Shale.
There is so much going on at any one time that impacts the Haynesville Shale. I weed through the information and summarize the important points.
I look at the micro-trends, such as drilling results and drilling rig activities, focusing on the who, what and where. I also concentrate on the macro-trends that will impact the future of the Haynesville Shale, including the supply/demand issues, the market for natural gas and trends that impact the gas industry as a whole.